Bluebook

Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that this document may contain occasional gaps in the text. These gaps are the result of a redaction process that removed information obtained on a confidential basis. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optimal character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. August 15, Strictly Confidential (FR) 1986 Class I FOMC MONETARY POLICY ALTERNATIVES Prepared for the Federal Open Market Committee By the staff Board of Governors of the Federal Reserve System STRICTLY CONFIDENTIAL (FR) CLASS I - FOMC August 15, 1986 MONETARY POLICY ALTERNATIVES Recent developments (1) Growth of all the monetary aggregates accelerated in July. M2 and M3 expanded at 12-3/4 and 13 percent annual rates last month, well above the Committee's 7 to 9 percent paths for these aggregates for the June-to-Septeber period.1/ The rapid growth in the broader aggregates lifted them into the upper portions of their longer-run ranges. Expansion in M1 was at around a 17 percent rate last month, somewhat faster than in June and about in line with its average pace over the second quarter. (2) The acceleration in the broader aggregates in July was associated in part with strengthening credit growth at banks and thrifts. A sharp rebound in overnight RPs, used to finance record bank acquisitions of government securities, accounted for most of the pickup in M2 growth. In addition, the remainder of M2--essentially core deposits and money market funds--continued to expand rapidly in July, as it has since spring, apparently bolstered by declines in market interest rates. Reflecting the sluggish adjustment of offering rates on OCDs, MMDAs and savings accounts, as well as a relatively flat yield curve, flows into liquid instruments continued heavy in July while small time deposits once again contracted. 1. Preliminary results from the June benchmark survey of RPs indicate a considerably higher level of RPs than now reflected in published data. Most of the additional strength is in term RPs at thrifts, where they apparently were being used to obtain relatively low cost financing for an expanding volume of mortgage securities issued or guaranteed by federal agencies and Treasury issues. With the revisions to overnight RPs fairly small, the effects on M2 are relatively minor. For M3, growth from the fourth quarter to July has been revised upward by about one-half of a percentage point at an annual rate to 8.8 percent. The new information, which mainly affects second-quarter estimates, has been incorporated in the figures presented in the table on the following page and the discussion in this bluebook. Revised data are expected to be published this Thursday, and are strictly confidential until that time. -2KEY MONETARY AGGREGATES (Seasonally adjusted annual rates of growth) May June July QIV'85 to July Ml 23.4 14.6 16.9 13.5 M2P 12.6 9.7 12.7 8.7 M3P 6.8 7.9 13.1 8.8 10.7 10.3 10.3 12.6 5.9 3.8 12.5 8.5 Nonborrowed reserves 1 32.4 22.0 23.3 20.7 Total reserves 33.0 21.4 25.3 18.7 Monetary base 13.7 9.1 8.7 9.1 Adjustment and seasonal borrowing 292 273 363 Excess reserves 838 931 907 Money and credit aggregates Domestic nonfinancial debt Bank credit Reserve measures Memo: (Millions of dollars) p--preliminary 1. Includes "other extended credit" from the Federal Reserve. NOTE: Monthly reserve measures, including excess reserves and borrowing, are calculated by prorating averages for 2-week reserve maintenance periods Data incorporate adjustments for discontinuities that overlap months. associated with implementation of the Monetary Control Act and other regulatory changes to reserve requirements. M3 growth also was boosted by a resumption in issuance of large time deposits by thrift institutions, which may be building up their balance sheets in anticipation of more stringent capital requirements on growth; assets of institution-only money funds also increased sharply, owing to relative rate movements. Strength in M1 reflected continued rapid expansion of demand deposits as well as OCDs. (3) The growth of the debt of domestic nonfinancial sectors in July is estimated to have remained near the 10 to 11 percent pace of recent months, with expansion from its fourth-quarter base at a 12-1/2 percent annual rate, above the 11 percent upper end of its long-run range. Treasury borrowing remained brisk in July, before being constrained by debt ceiling limitations in August. The Treasury was able to raise a substantial amount of new money at its mid-quarter refunding auctions settling in mid-August, but only by utilizing the borrowing authority of the Federal Financing Bank and paying down bills. Overall borrowing by nonfinancial businesses appears to have slowed somewhat from earlier in the year, despite continued heavy share retirements associated with mergers and financial restructurings; the sum of bank loans and commercial paper contracted a bit in July and bond sales, while still strong, were near the slowest pace of the year. Fragmen- tary information on household borrowing in July suggests that mortgage debt growth remained sizable while consumer credit slackened. Bond issuance in the tax-exempt market surged in advance of a tax reform deadline scheduled for September 1. (4) Nonborrowed and total reserves increased in July at about 23 and 25 percent annual rates, respectively, reflecting rapid growth of required reserves against transactions deposits. With the decline in the -4discount rate, reserve paths continued to be constructed assuming $300 million of adjustment plus seasonal borrowing. In the two complete reserve maintenance periods since the last meeting, such borrowing has averaged just under $400 million. In the conduct of open market operations over the inter- meeting period, the Desk recognized that a substantial portion of this total represented borrowing by institutions facing special situations. (5) Federal funds have traded generally in the 6-1/4 to 6-3/8 percent area since the cut in the discount rate announced shortly after the last FOMC meeting, down from the 6-7/8 percent level prevailing around the time of the last meeting. With the discount rate reduction already widely expected by the time of the July FOMC meeting, other short-term rates declined by somewhat less. In long-term credit markets, rates in- creased in the first part of the intermeeting period as economic developments and the absence of policy moves abroad were seen as reducing the scope for further Federal Reserve ease; in addition, weakness in bond markets reflected anxieties near the time of the Treasury refunding about foreign demand for dollar-denominated securities in circumstances of a weakening dollar. More recently, with the completion of the Treasury refunding and a rekindling of some expectations of a coordinated discount rate cut in key industrial countries in response to disappointing economic growth, bond rates have retraced much of their earlier rise and short-term rates have declined an additional 1/8 of a percentage point or so. (6) The dollar has fallen a further 3-1/4 percent on a weighted- average basis since the last Committee meeting. Declines of 5 percent against the mark and 3-3/4 percent against the yen were partly offset by a 2-1/4 percent rise against sterling. Indications that other central banks would not follow, at least immediately, the Federal Reserve's discount rate -5- cut in July and various statements by U.S. officials suggesting the possibility that additional dollar declines might be needed to correct massive trade deficits contributed to the dollar's weakness. Policy alternatives (7) The table below presents three alternative specifications for the monetary aggregates for the June-to-September period and associated federal funds rate ranges. (More detailed data, including implied growth for the July-to-September period and from the fourth quarter of 1985 to September, are given on the table and charts on the following pages.) Alt. A Alt. B Alt. C Growth from June to September M2 10-1/4 9-1/2 8-3/4 M3 M1 9-1/2 16 9 14-1/2 8-1/2 13 Associated federal funds rate range (8) 3 to 7 4 to 8 5 to 9 Growth in all the monetary aggregates is expected to slow over August and September from the very rapid pace of July. Even so, with reserve conditions about unchanged as assumed for alternative B, growth of the broader aggregates would be expected to come in around the upper end or a bit above the Committee's 7 to 9 percent range for June to September. Growth within that range would seem to require a moderate increase in pressures on reserve positions, as embodied in alternative C. Should pressures be eased as under alternative A, M2 in particular would be expected to be more noticeably above the short-run range, though likely remaining just within its long-run range through September. M1 growth would be anticipated to remain quite rapid under any of the alternatives, though below the extraordinary pace of the second quarter. (9) Alternative B assumes adjustment plus seasonal borrowing at the discount window averaging around $300 million (abstracting from any Alternative Levels and Growth Rates for Key Monetary Aggregates M2 M3 M1 Alt. C Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C Alt. A Alt. B 2622.4 2649.9 2671.4 2622.4 2649.9 2671.4 2622.4 2649.9 2671.4 3293.2 3311.8 3333.5 3293.2 3311.8 3333.5 3293.2 3311.8 3333.5 646.1 658.7 666.7 646.1 658.7 666.7 646.1 658.7 666.7 2699.7 2718.8 2740.5 2699.7 2718.2 2735.5 2699.7 2717.5 2730.5 3369.8 3389.5 3412.5 3369.8 3389.0 3408.3 3369.8 3388.4 3404.1 676.1 684.6 693.4 676.1 684.3 690.9 676.1 684.1 688.4 13.9 12.6 9.7 13.9 12.6 9.7 13.9 12.6 9.7 11.4 6.8 7.9 11.4 6.8 7.9 11.4 6.8 7.9 14.5 23.4 14.6 14.5 23.4 14.6 14.5 23.4 14.6 12.7 8.5 9.6 12.7 8.2 7.6 12.7 7.9 5.7 13.1 7.0 8.1 13.1 6.8 6.8 13.1 6.6 5.6 16.9 15.0 15.4 16.9 14.6 11.6 16.9 14.2 7.5 Quarterly Ave. Growth Rates 1985-Q4 6.1 1986-Q1 4.3 Q2 10.5 Q3 10.8 6.1 4.3 10.5 10.6 6.1 4.3 10.5 10.3 6.6 7.5 8.7 9.4 6.6 7.5 8.7 9.2 6.6 7.5 8.7 9.0 10.7 7.7 15.8 16.7 10.7 7.7 15.8 16.2 10.7 7.7 15.8 15.6 Mar. 86 to June 86 June 86 to Sept.86 July 86 to Sept.86 12.2 10.3 9.1 12.2 9.6 8.0 12.2 8.8 6.8 8.7 9.5 7.6 8.7 9.0 6.9 8.7 8.5 6.1 17.7 16.0 15.4 17.7 14.5 13.1 17.7 13.0 10.9 8.0 8.8 8.0 8.6 8.0 8.4 8.1 8.7 8.1 8.5 8.1 8.3 12.8 14.1 12.8 13.7 12.8 13.2 Levels in billions 1986-April May June July August September Monthly Growth Rates 1986-April May June July August September Q4 85 to June 86 Q4 85 to Sept.86 1986 Ranges: 6 to 9 6 to 9 [3 to 8] , , CHART 1 ACTUAL AND TARGETED M2 8BlI I on of dollars 12850 2800 ACTUAL LEVEL -* SHORT RUN ALTERNATIVES 2750 -I 2700 2650 ao a a ° S a a a a ° a S B a0a -- 2600 - 2550 -- 2500 I SN 1985 I I D I J I F I M I I A M I J I f J 1986 A I S O i 2450 N D CHART 2 ACTUAL AND TARGETED M3 BI Ilons of do lIre 13600 -- ACTUAL LEVEL * SHORT RUN ALTERNATIVES - 3500 -- 3400 -- 3300 -- 3200 I 0 I N 1985 I D I J II I F M A I M I J J 1986 A I S O 3100 N D CHART 3 ACTUAL AND TARGETED M1 B1 I lonr of dol Ilw I 710 700 - - * ACTUAL LEVEL SHORT RUN ALTERNATIVES 690 - 680 - 670 - 660 - 650 .0 .0 - 640 *0 - 630 .0 S , I J SN D 1985 I I F i M i A I M I J I J 1986 I A t S I 0 - 620 - 610 600 I N D Chart 4 DEBT 8Ill lon of dot Irw 17700 -- ACTUAL LEVEL .- 7500 -1 7300 7100 - 6900 -- 6700 i , D SN 1985 I I J I F I M I A t M r I J J 1986 SI A S 0 6500 I N D special situation credit). Federal funds would probably continue to trade in the 6-1/4 to 6-3/8 percent area. M2 growth would be expected to slow to around 8 percent over August and September, reflecting in large measure a leveling off in overnight RPs as banks stop adding aggressively to their holdings of U.S. government securities in a more stable interest rate environment. In addition, growth of retail deposits and money market funds is likely to moderate as offering yields come more in line with market rates around current levels. Fragmentary data for early August suggest that expansion of M2 is indeed slowing from its rapid July pace. Even with the anticipated moder- ation in M2, growth would average 9-1/2 percent fran June to September and 10-1/2 percent on a quarterly-average basis in the third quarter, implying an unusually large drop in its velocity (given the greenbook forecast for GNP) of 5-1/2 percent at an annual rate. The projected moderation in M3 growth from its July bulge reflects less rapid expansion in its non-M2 component as well as in M2. Inflows to institution-only money funds should abate in response to the realignment of fund yields with market rates, and the expected deceleration in bank credit would act to reduce issuance of managed liabilities. (10) Growth of M1, while diminishing over August and September under alternative B, is likely to remain quite strong at around 13 percent. Both its demand deposit and NOW account components should still grow fairly rapidly in the near term, given recent declines in open market rates and, in the case of OCDs, sluggish adjustment of deposit offering rates, which imply extremely thin opportunity costs at least for a while. The decline in the velocity of M1 would be at an 11 percent rate in the third quarter, nearly as large as the 12 percent drop in the second quarter. (11) The money growth specifications of alternative B imply increases in both M2 and M3 from their fourth-quarter base to September of around 8-1/2 percent at an annual rate, with growth in M1 at nearly a 14 percent annual rate through September. Expansion in all the monetary aggregates would be expected to moderate a little further in the fourth quarter, should interest rates remain close to current levels as in the staff's greenbook forecast. In that forecast, nominal GNP is projected to strengthen only moderately in the fourth quarter, while the effects of earlier declines in interest rates on money demand should continue to diminish. Under these circumstances, both M2 and M3 are likely to remain fairly high in their long-run ranges, growing perhaps around 8-1/2 percent from QIV 1985 to QIV 1986. M1 expansion for the year might be about 13 percent, with its velocity registering a record postwar decline. (12) Total debt of domestic nonfinancial sectors is likely to ex- pand a little more rapidly over August and September than in recent months. Boosting debt growth this month is the surge in bond issuance by state and local governments. We anticipate some rebound in borrowing by the Treasury in coming weeks, assuming some action on the debt ceiling, to cover its considerable financing needs and rebuild its cash balance. Business credit needs probably will continue to be bolstered by heavy share retirements associated with mergers and financial restructurings, although the financing gap should remain relatively small, reflecting flat capital spending and internal funds. Household mortgage borrowing should remain substantial, given the continued strength of the single-family home market, while consumer credit expansion is expected to moderate further. From its fourth-quarter base, debt is projected to stay well above the upper end of its monitoring -10range through the third quarter and to remain above the upper end of its range for the year, despite sane further moderation expected in the fourth quarter. (13) Short- and long-term interest rates are expected to remain around their current levels under alternative B, at least initially, though with federal funds continuing to trade in a 6-1/4 to 6-3/8 area some modest upward pressures on interest rates could emerge as market participants begin to reassess the odds on a near-term easing in policy. Nevertheless, the dollar could continue to drift lower on foreign exchange markets. In addi- tion to the usual economic news, financial markets may be confronted with important developments in tax reform and federal budget policy that could significantly affect investor sentiment during the weeks ahead. (14) Alternative A involves an easing of pressures on reserve positions, either through a reduction in regular adjustment plus seasonal borrowing to a frictional level of perhaps $150 million or so, or a cut in the discount rate by 1/2 percentage point with discount borrowing maintained at the current specification of $300 million. probably decline to 5-3/4 percent or a little The federal funds rate would above. The associated decrease in market interest rates would be expected to boost M2 growth to a little over a 10 percent annual rate over the June-to-September period, moving this aggregate to just below the upper end of its that M2 growth could be even more rapid if long-run range. There is a risk institutions prove especially reluctant to reduce offering rates on conventional NOW and savings accounts as market rates drop closer to the previous regulatory ceilings of 5-1/4 and 5-1/2 percent on these accounts. In any event, given the lagged effects of any near-term easing in market conditions, M2 growth in the fourth quarter -11- could continue at a fairly rapid pace, absent a subsequent move toward more reserve restraint; this would leave the aggregate around the upper end or even somewhat above its long-run range for the year. M3 would grow at around a 9-1/2 percent annual rate over the June-to-September period under this alternative, entering the fourth quarter near the upper end of its annual range. The risks of M3 running significantly above the upper end of its annual range, even in the event of a surge in OCDs and savings deposits, would be limited by offsetting reductions in issuance of managed liabilities by banks and thrifts. M1 would be expected to increase at a 16 percent rate between June and September under this alternative, moving even further above the upper end of its range by the end of the quarter. (15) Short-term rates would decline appreciably, with the 3-month Treasury bill rate falling toward 5-1/4 percent under alternative A. Bond yields probably would also decline, but any sustained sizable drop likely would require signs of continuing sluggishness in the economy and lack of price pressures, as well as the absence of substantial weakness in the dollar. The dollar could come under heavy selling pressure with this alternative, unless key foreign central banks were also to take easing steps. (16) Alternative C assumes a tightening of reserve positions, with borrowing from the discount window rising to around $500 million and the federal funds rate backing up to the 6-3/4 to 6-7/8 percent area. Under this alternative, the slowing in M2 and M3 likely would be sufficient to move growth of these aggregates to within the 7 to 9 percent three-month range established at the last meeting. In addition, the tighter reserve conditions of this alternative would place these aggregates on a trajectory that would better -12- assure that they would remain well within their annual ranges for the year. Growth in M1 also would slow substantially by September and into the fourth quarter as market interest rates backed up. Growth for the year still would be considerably above the upper end of its range, however, perhaps in the vicinity of 12 percent. (17) Treasury bill rates could rise by more than 50 basis points to around 6-1/4 percent as reserve conditions tightened unexpectedly. Rates on CDs could jump by even more if such a move were viewed as aggravating repayment difficulties of bank borrowers, especially if the rise in rates were seen as likely to restrain economic activity substantially. The slide of the dollar on foreign exchange markets would, at least temporarily, be slowed or halted. A firmer tone to the dollar and a reassessment of the inflation out- look could act to limit somewhat the accompanying rise in long-term interest rates. -13- Directive language (18) Draft language for the operational paragraph, with the usual options for alternative specifications of reserve pressures, is shown below. This draft follows the format used at the July meeting in specifying expected growth rates for M2 and M3 but not for M1. With respect to M1, the draft retains language referring to the expectation of a reduction in M1 growth from the second-quarter pace. Under all three bluebook alternatives, the staff is projecting some slowing in the rate of M1 growth for June to September relative to the previous three months, although the degree of slowing is not very marked, especially under alternative A. Should the Committee choose this alternative, it may wish to delete the language referring to the expected moderation in M1 growth, leaving the statement that M1 will be judged in light of the broader aggregates and other factors. With regard to possible intermeeting adjustments in the degree of reserve pressures, the draft provides for symmetry in either direction, as in the July directive, but could be adapted to an asymmetric approach (with the appropriate use of "might" and "would") as in a number of earlier directives. OPERATIONAL PARAGRAPH In the implementation of policy for the immediate future, the Committee seeks to decrease somewhat (Alt. A)/MAINTAIN (Alt. B)/INCREASE SOMEWHAT (Alt. C) the existing degree of pressure on reserve positions[DEL: taking account of the possibility of a change in rate.] discount the This action is expected to be consistent with growth in M2 and M3 over -14the period from June to September at annual rates of about ____ TO ____ [DEL: 7to 9] percent. While growth in M1 is expected to moderate from the exceptionally large increase during the second quarter, that growth will continue to be judged in the light of the behavior of M2 and M3 and other factors. Somewhat greater or lesser reserve restraint might (WOULD) be acceptable depending on the behavior of the aggregates, the strength of the business expansion, developments in foreign exchange markets, progress against inflation, and conditions in domestic and international credit markets. The Chairman may call for Committee consultation if it appears to the Manager for Domestic Operations that reserve conditions during the period before the next meeting are likely to be associated with a federal funds to 8] percent. rate persistently outside a range of ____TO ____ 4[DEL: Selected Interest Rates August 18, 1986 Percent 1985--ig8h Low 8.98 7.13 8.65 6.77 9.03 6.92 9.21 7.06 9.13 7.34 8.83 7.22 8.31 7.00 10.75 9.50 11.19 8.24 11.95 9.07 11.89 9.34 13.23 10.62 10.31 8.85 13.57 10.52 13.29 11.09 11.14 9.17 1986--lih8 Law 9.55 6.31 7.21 5.65 7.30 5.68 7.35 5.73 7.94 6.12 7.91 6.21 7.22 5.82 9.50 8.00 8.60 6.64 9.38 7.15 9.52 7.16 10.83 9.15 8.72 7.55 10.97 9.57 10.99 9.86 9.09 8.41 Aug. Sept. 7.90 7.92 7.14 7.10 7.32 7.27 7.48 7.51 7.81 7.93 7.73 7.83 7.08 7.10 9.50 9.50 9.31 9.37 10.33 10.37 10.56 10.61 11.76 11.87 9.44 9.61 12.04 12.11 12.19 12.19 9.52 9.52 Oct. Nov. Dec. 7.99 8.05 8.28 7.16 7.24 7.10 7.33 7.30 7.14 7.45 7.33 7.16 7.88 7.81 7.80 7.81 7.84 7.87 7.15 7.21 7.23 9.50 9.50 9.50 9.25 8.88 8.40 10.24 9.78 9.26 10.50 10.06 9.54 11.82 11,35 10.93 9.54 9.22 8.96 11.97 11.51 10.83 12.16 11.78 11.26 9.50 9.38 9.19 1986--Jan. Feb. 8.14 7.86 7.48 6.99 6.85 6.92 6.56 7.07 7.06 6.56 6.06 6.15 6.21 5.83 7.17 7.11 6.57 6.08 6.19 6.27 5.86 7.21 7.11 6.59 6.06 6.23 6.32 5.90 7.82 7.69 7.24 6.60 6.65 6.73 6.37 7.78 7.70 7.30 6.75 6.72 6.79 6.42 7.15 7.11 6.96 6.58 6.22 6.18 6.06p 9.50 9.50 9.10 8.83 8.50 8.50 0.16 8.41 8.10 7.30 6.86 7.27 7.41 6.86 9.19 8.70 7.78 7.30 7.71 7.80 7.30 9.40 8.93 7.96 7.39 7.52 7.57 7.27 10.74 10.21 9.41 9.26 9.50 9.65 9.57 8.50 7.99 7.74 7.64 7.96 8.30 7.95 10.79 10.45 9.86 9.71 10.22 10.45 10.16 10.88 10.71 10.08 9.93 10.21 10.68 10.49 9.01 8.93 8.65 8.53 8.57 8.60 8.52 7 14 21 28 6.87 6.82 6.87 6.85 6.08 6.08 6.20 6.18 6.11 6.09 6.23 6.25 6.13 6.15 6.33 6.30 6.55 6.58 6.73 6.69 6.68 6.69 6.77 6.73 6.30 6.25 6.19 6.19 8.50 8.50 8.50 8.50 7.03 7.09 7.46 7.40 7.46 7.57 7.91 7.80 7.54 7.40 7.60 7.45 9.42 9.53 9.57 9.60 7.76 7.91 8.09 8.07 9.87 10.17 10.32 10.52 10.00 10.08 10.36 10.38 8.59 8.57 8.57 8.54 Jun. 4 11 18 25 6.95 6.89 6.87 6.86 6.38 6.36 6.15 6.10 6.46 6.43 6.24 6.15 6.52 6.49 6.26 6.19 6.78 6.64 6.72 6.66 6.70 6.84 6.80 6.75 6.15 6.17 6.19 6.17 8.50 8.50 8.50 8.50 7.70 7.65 7.33 7.22 8.19 8.09 7.71 7.55 7.81 7.76 7.50 7.43 9.70 9.66 9.70 9.55 8.36 8.51 8.27 8.05 10.67 10.32 10.47 10.32 10.74 10.76 10.61 10.62 8.62 8.60 8.65 8.54 July 2 9 16 23 30 7.02 6.87 6.51 6.42 6.32 6.01 5.90 5.78 5.74 5.84 5.99 5.89 5.83 5.81 5.89 6.05 5.94 5.84 5.84 5.96 6.55 6.45 6.36 6.31 6.31 6.72 6.67 6.41 6.30 6.27 6.19 6.15 6.09 5.99 5.89 8.50 8.50 8.07 8.00 8.00 7.03 6.96 6.79 6.75 6.92 7.38 7.34 7.24 7.19 7.41 7.26 7.18 7.16 7.24 7.48 9.49 9.54 9.51 9.67 9.69 7.90 7.91 7.91 8.08 7.96 10.27 10.17 10.07 10.22 10.07 10.61 10.59 10.43 10.40 10.40 8.54 8.57 8.50 8.48 8.49 Aug. 6 13 6.36 6.31 5.74 5.65 5.78 5.68 5.81 5.73 6.23 6.12 6.27 6.21 5.86 5.82 8.00 8.00 6.79 6.64 7.37 7.28 7.50 7.39 9.58 9.49 7.97 7.64 10.00 9.87 10.40 10.23 8.44 8.42 6.36 6.29 36 6. p 5.70 5.59 5.56 5.76 5.56 5.54 5.77 5.66 5.64 6.18 5.96 5.96 6.24 6.14 6.15 8.00 .00 8.00 6.68 6.51 6.51p 7.30 7.16 7.14p 7.41 7.29 7.29p Mar. Apr. may June July may Daily-Aug. 8 14 15 - NOTE: Wmky data for columns I trough t1are statement week avrages. at in column are taken from DonoOhue' Money Fund Report. Columns 12 end 13 ae 1-dy quotes for Friday and Thursday, respectively, following the end of the statement week. Column 13 I the Bond Buyer revenue index. Column 14 Is the FNMA purchase yield, plus loan servcing fee, on 30day mandatory delivery commitments on the Friday following the end of the statement week. Column 15is the average contract rate on new commitments fr fxedrate mort- -- gages (FRMs) with 80 percent loan-to-value ratios at a sample of savings and loans Column 16 Is the average Initial contract rate on new commitments for one-year. adjutablerate mortgages (ARMs) at S&Ls offering both FRMs and ARMs with the same number of discount points. FR 1367 (12/5) Money and Credit Aggregate Measures Seasonally adjusted 18, 1986 AUG. Period M1 1 Money stock measures and liquid assets Bank credit nontransactions components total loans and M2 2 in M2 in M3 only 3 4 M3 L ___ _ 5 Domestic nonfinancial debt U.S. government2 other Investment 6 7 2 total!2 __ 8 9 10 PERCENT AINUAL GROVWTH ANNUALLT (Ul0 TO QI1) 1983 1984 1985 10.4 5. 11.9 12.2 8.0 8.7 12.0 8.8 7.7 QU0RTERLZ AVERAGE 3RD QT. 1985 4TH QT«. 1985 1ST QTi. 1986 28D UTQ. 1986 14.5 10.7 7.7 15.8 9.6 6.1 4.3 10.5 8.0 4.7 3.3 8.9 NONTHLI 1985-JULr AUG. SPT. OCT. NoW. DEC. 10.8 17.3 13.3 5.3 11.5 12.6 8.3 9.3 6.8 4.3 5.9 1 7.1 1.0 21.2 3.8 9.9 10.5 7.7 10.4 11.9 8.5 10.6 11.2 9.9 21.5 15.8 15.2 8.5 13.8 13.6 11.2 -0.2 8.5 20..57.5 1.3 7.6 6.6 8.7 7.8 9.5 8.2 6.9 9.6 9.4 32.7 4.1 14.6 15.2 17.5 9.5 12.4 14.4 15.6 9.8 12.9 14.6 16.1 9.7 7.5 6.9 4.8 3.9 .2 5.3 -3.7 -2.3 11.9 11.2 5.7 9.1 5.9 7.1 7.8 5.7 5.9 7.5 5.8 9.2 9.1 7.0 12.0 12.3 9.1 7.7 8.7 5.4 13.4 15.6 16.6 14.0 7.9 9.1 24.5 28.9 12.2 13.0 13.3 13.2 13.6 21.6 13.2 13.2 12.1 12.3 16.1 23.3 14.3 14.0 1986--JAN. /SB. BAR. APR. fiA JUNE JULt P BOrTHLI LEVELS (SBILLIOIS) 1986--HAR. API. irA JUNE JULI P 1.1 7.3 14.1 14.5 23.4 14.6 16.9 1.6 3.6 6.8 13.9 12.6 9.7 12.7 1.7 2.4 4.5 13.8 9.1 8.1 11.8 37.6 16.9 11.2 1.6 -15.9 0.4 14.) 8.7 6.3 7.7 11.4 6.8 7.9 13.1 7.0 5.7 4.2 7.3 10.2 5.5 18.7 3.4 5.6 2.0 5.9 3.8 12.5 16.4 9.8 5.3 7.8 12.7 15.4 13.9 18.9 8.4 9.2 10.6 10.0 8.8 9.2 18.3 8.7 8.3 9.9 10.7 10.3 10.3 638.4 646.1 658.7 666.7 676.1 2592.3 2622.4 2649.9 2671.4 2699.7 1953.9 1976.3 1991.3 2004.7 2023.7 669.9 670.8 661.9 662.1 670.0 3262.2 3293.2 3311.8 3333.5 3369.8 3892.4 3916.2 3949.5 3967.6 1944.6 1947.9 1957.5 1963.7 1984.2 1628.2 1638.8 1656.2 1677.5 1697.0 5384.1 5431.7 5477.0 5517.1 5559.6 7012.4 7070.5 1133.3 7194.6 7256.6 13888t LEVELS (SBILLIOIS) 1986-JU.T 7 14 21 28P 674.1 673.4 677.5 676.9 AOG. 1/ 2/ 4P 679.6 ANNUAL RATES FOR BANK CREDIT ARE ADJUSTED FOR A. TLANSFER OF LOANS nFlOCONTINENTAL ILLINOI S ATIONAL BANK TO THE FDIC BEGINNIIG SEPTE88EB 26, 1984. DEBT DATA 8tB ON AiOITHLY AVERAGE BASIS, DEBITED Bt AVERAGING END-OF-NOWTH LEVELS Or ADJACENT lONTHS, AND HAVE E888 ADJUSTED TO 8EOTVE DISCONTIUOITIES. P-PRBELla II Components of Money Stock and Related Measures Billions of dollars, seasonally adjusted unless otherwise noted Demand Currency Period deposits Other Overnight checkable RPs and depoits Eurodollars MMDAs Savings Small denoml nation NSA deposits time NSA 1 Large denomination Term RPs tions time NSA only deposilts Term Eurodollar@ Savings NSA bonds 18, 1986 Short. term Commer. Banker Treasury clat paper accep- tances securities 7 8 0 10 11 12 13 14 309.7 291.0 303.2 775.0 881.8 877.3 138.2 161.7 176.0 43.2 57.7 64.1 325.2 409.6 433.0 48.0 65.6 63.0 89.3 81.8 77.8 70.9 74.0 79.0 211.1 268. 5 295.8 127.5 158.7 199.5 44.0 44.5 42.7 487.2 495.2 499.8 296.7 299.7 300.3 888.0 880.9 878.3 175.8 176.8 176.7 65.0 63.6 62.3 418.2 421.0 425.6 55.8 57.3 58.6 77.6 78.8 78.9 76.7 77.2 78.0 279.2 277.3 280.6 171.6 182.9 187.2 43.7 43.6 43.2 65.2 66.4 70.3 504.1 509.5 512.0 302.3 303.7 303.6 875.7 876.0 880.3 177.0 176.8 176.5 63.3 64.5 64.6 429.7 432.9 436.5 59.8 63.3 66.0 78.2 78.4 76.7 78.5 79.0 79.5 280.9 299.5 307.1 192.5 196.4 209.5 43.9 180.5 183.1 185.2 68.8 68.5 67.5 515.7 516.J 520.5 304.0 304.9 306.9 885.9 891.0 894.7 177.7 181.0 186.2 67.3 67.7 70.2 447.9 68.8 451.2 450.5 70.5 71.4 76.0 79.2 82.7 79.9 80.5 81.1 304.1 305.8 298.0 210.6 209.2 209.5 41.5 42.1 41.6 189.9 195.1 199.0 66.9 69.1 66.5 525.2 530.8 540.4 311.4 318.5 325.0 896.2 891.2 885.9 391.4 193.4 197.7 74.1 76.1 75.0 452.1 446.3 445.6 71.2 73.0 73.4 81.0 78.3 77.6 81.8 82.6 83.4 297.2 308.3 304. 203.0 206.7 206.3 41.0 40.1 40.0 288. 3 204.0 71.9 546.2 331.3 883.4 200. 1 77.5 446.5 73.6 76.1 3 147.2 157.8 169.7 243.4 247. 1 268.4 130.2 144.2 176.3 53.6 56.1 67.3 376.2 405.1 508.5 165. 3 166.9 167.7 260.4 263. 266.4 164.8 169.0 171.5 60.8 63.8 64.5 168.7 169.8 170.6 266.0 267.8 271.5 173.7 176.7 178.6 FIB. 171.9 172.9 173.9 268.9 269.2 273.2 NAT 174.4 175.8 176.6 275.7 281.6 284.9 177.5 1983 1984 1985 purpose, deposlts' and brokerl dealer 2 ANNUALLI(4TB Money market mutual funds. NSA Institugeneral AUG. 4 5 15 16 QTE): 8HOTIULI 1985-JOLI AUG. SEPT., OCT. DEC. 1986-JAN. JOL P JOLI P 1/ 2/ 3/ HBIlFT INSTITUTIONS ABR BETAIL BBPORCBASE AGIQBEE8 TS. ALL I A AND KEOGH ACCOUNTS AT CONE88CIAL BANKS AND INCLUDES FPRO SHALL TIlE DEPOSITS. EXCLUDES IRA AND IEOGH ACCOUNTS. NET OF LARGE DEROHINATION TIHE DEPOSITS HELD B1X ONEI BAERKST UTUAL FUNDS AID THRIFT INSTITUTIONS. P-PRBLII NARY 43.1 41.1 SUBBtRACBD STRICTLY CONFIDENTIAL (FR) CLASS II-FOMC Net Changes in System Holdings of Securities4 Millions of dollars, not seasonally adjusted August 18, 1986 Treasury bills net change' nyt chang Period __ _II_ ____________-_______ __ _ within within 1-ear Treasury coupons not purchases T r 1-5 S-10 over 10 within wt1ye total 703 393 388 890 236 358 4,564 2,768 2,803 3,653 3,440 4,185 -100 108 6 345 1,326 1,295 12 1,552 I_-_year Federal agencies net purchases' or 1N 1-5 5-10 over 10 Net change outright holdings totald total 1 1980 1981 1982 1983 1984 1985 -3,052 1985--qTR. I IV -2,044 7,183 4,027 5,431 I II -2,821 7,585 -2,861 61 61 -3,318 396 5,337 5,698 13,068 3,779 14,596 II 1986--QTR. 1986-Jan. Feb. Mar. 2,988 July June July Aug. 2,138 961 245 465 143 1,702 1,794 1,896 1,938 2,185 846- 6 868 2,035 8,491 8,312 16,342 6,964 18,619 -735 8,409 3,962 6,983 7,535 -3,277 396 Apr. May June 1986--May 912 294 312 484 826 1,349 Nt RPs' 2,462 684 1,461 -5,445 1,450 3,001 462 -350 -3,446 6,336 -3,580 -356 -3,466 198 -312 3,659 -4,470 455 3,196 2,988 3,146 1,402 1,402 867 867 -1,270 7 14 21 28 135 84 305 135 -50 84 305 -2,041 -2,491 5,469 -3,228 4 11 18 25 2,979 2,979 296 296 171 248 171 248 -1,788 -1,837 3,908 -3,584 2 9 16 23 30 380 380 208 208 128 531 128 531 6 13 168 126 168 36 LEVEL-Aug. 13 (S billions) 92.1 34.5 15.1 2.5 22.3 -~ ________________________________ 1 Change from end-of-perlod to end-of-perlod. 2. Outright transactions In market and with foreign accounts, and redemptions (-) In bill auctions. 3. Outright transactions in market and with foreign accounts, and short-term notes acquired In exchange for maturing bills. Excludes redemptions, maturity shifts, rollovers of maturing coupon Issues, and direct Treasury borrowing from the System. 4. Outright transactions in market and with foreign accounts only. Excludes redemptions and maturity shifts. j 3.8 1.3 .4 195.8 8.0 i 545 1,630 5,527 -6,570 -169 -341 425 -3.3 __________________ 5. In addition to the net purchase of securities, also reflects changes in System holdings of bankers' acceptances, direct Treasury borrowing from the System and redemptions (-) of agency and Treasury coupon issues. 6. Includes changes In RPs (+), matched sale-purchase transactions I-), and matched purchase sale transactions (+). 

Federal Reserve (1986, August 18). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19860819

@misc{wtfs_bluebook_19860819,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1986},
  month = {Aug},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19860819},
  note = {Retrieved via When the Fed Speaks corpus}
}